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How to Find the Lowest Price on Penny Stocks



Trading the low priced micro caps, penny stocks, or pink sheets is a “High Risk High Reward” style of trading. I have found that one of the most profitable ways to trade these penny stocks is by finding the bottoms. If you are correct and find the bottom, the stock has nowhere to go but up. If you are wrong and miss the bottom, no one wants to “catch a falling knife”.

When a penny stock is bottoming, it has dropped to a new recent low. This could be as dramatic as the lowest price in years or something as simple as a 50% pullback from recent highs. At this point the stock may begin to stabilize (trade sideways). This could mean that your penny stock is now poised to rise again in price, but it could also be preparing for another move lower.

When you buy micro caps, penny stocks, or pink sheets it is always easy to find charts that look like they’re at their bottoms. It seems that every night we are analyzing a hundred different penny stocks that have recently broken their downtrend. If you are unsure of how to find stocks in up trends or downtrends, try a stock screener.

Once you think you've found a penny stock that is technically ready to begin that profitable trend to new highs, it is now time to do your homework. Fundamentally there are many things to look for. There are so many that I can only give you a brief overview. You will want to read the filings and recent news to understand the companies share structure, current operation, and if there are any future events that may cause the stock to rise. Some of the more important items you will be searching for in the filings are operating shares, authorized shares, float and warrants. One of my favorite items to look for in penny stocks is a strong share structure and an upcoming event. You can then buy the penny stock before recent news is released on the stock and you have shares before the hype and excitement.

When you find penny stocks that are bottoming with a solid share structure and is due to release great news, such as a new product or strong earnings. This is probably a good time to buy. Prepare to hold on, stocks in this market have been known to rise thousands of percentage points in a short amount of time.

Trading penny stocks based on penny stock picks can be a dangerous proposition. Although often these stocks rise to great heights, they often crash unexpectedly leaving the late buyers "holding the bag" it doesn't hurt to get ideas from these pumps and sometimes enter them. Honestly though, its hard to find a bottom on a penny stock that is being hyped up already. Good luck in the market it is a lot of fun but can take your money very quickly.
About Author Keith Guyette :

Keith Guyette is the author of this and many other stock trading articles. He is owner of http://www.thepennystockblog.com that provides penny stock picks and information for the traders looking to buy penny stocks.


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Article Added on Sunday, January 31, 2010
Other Articles by Keith Guyette

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•Penny Stocks Trading
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•Penny Stock Investing
Penny stock investing is one of those professions where your always on the edge of you seat, I imagine someone in the world series of poker feels the same way. Except we feel this every time we have money in a trade. In this market, penny stock investors can attain huge gains quickly, but they can also lose all that profit in the blink of an eye. Some who trade in the otcbb market make a living with this wild west style of trading. Others will lose their trading capital as they make poor...

•Investing in Penny Stocks
When you begin to look for penny stocks for an investment, there are many decisions to make. Penny stocks are very speculative, which means if you buy the wrong stock at the wrong time, you could lose a lot of money. That being said, there is a lot of money to be made trading speculative stocks. You must do your research, learn how to chart and trust your instincts and knowledge. There is no hoping. Doing this, you may be able to begin making a profit quickly on a relatively small...

•Penny Stock Picks 6 Rules to Follow
Penny stocks are high risk, high reward stock plays. When buying these high risk stocks you must pick the right stock to buy at the right price. If you pick the wrong stock or you time your purchase poorly you will lose some money, maybe all of your investment. On the other hand with the right stock and the right timing you could make a huge profit on a small investment. This is stock trading and all stock trading is unpredictable, this becomes even more apparent in penny stocks. Even with...

•Penny Stock Tools
We all know that Penny Stocks are a risky investment. To reduce the risk of trading these stocks you must work on some basic guidelines of what the company looks like as well as the chart of the specific penny stock. The more knowledge you have about reading charts and the back grounds of penny stocks, the better off you will be. Research is the key to finding successful penny stock picks. You will need a stock screener to find stocks that meet your first criteria. You will also need some help...

•Hot Penny Stock Picks
When trading any security you really need to do your homework. If you do not, and the price per share drops, you have no one to blame but yourself. Stock picking sites and bulletin boards often allow a trader the benefit of finding many emerging companies. These are great places to start but you must always do your own due diligence. If you are unsure you should try personal finance training or speak with a stock broker before investing. There are many different types and styles of pick sites....

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